the overhead for NTFS + windows is 20% free space - so you are at that point
if you've done all the upgrades
go to control panel | programs and remove the sp1 remove option
then make sure you are displaying system files .... look in c:\windows
delete the $NtUninstallKB938464$ type files (they'll be coloured blue)
DO NOT DELETE $hf_mig$
download and install ccleaner
http://www.ccleaner.com/download
run it with the default settings (knock cookies off the list if you bank)
(ccleaner will do the above ... but I like to do it myself
then check your disc for errors and finally - defrag
after that - if no big improvement ... you'll have to archive your data and/or remove some progs